According to a survey of 150 hotels across the country, hoteliers are targeting total revenue growth of 7 per cent for 2011. When it comes to food and beverage revenue growth, London hoteliers are aiming for 10 per cent growth this year, while provincial hoteliers are looking for an uplift of 9 per cent.
But Vision chairman, Clive Hillier says that areas of non-essential spending are still far from certain, and hoteliers should be concerned about the implications on their business.
"While Revenue Per Available Room (RevPAR) has always been a well publicised measure of the hotel industry, it is Total Revenue Per Available Room (TRevPAR), encompassing all areas of income such as food and beverage, conferencing and leisure as well as rooms, that gives a more accurate picture of how the market is performing,” he said.
“It is in these areas where most of the pain is being felt."
"We are concerned that lavish, as well as some basic conferencing will remain a low corporate priority as companies face uncertain income streams and low levels non-essential spending. At the same time personal disposable income is also expected to fall for many households with eating out a likely early casualty. This should greatly concern hoteliers."
‘Two-speed’ hospitality economy
Vision’s survey found a continuing disparity between the growth expectations of London hotels (8.8 per cent) and those in the rest of the country (6.3 per cent).
London hotels are faced with a more positive outlook for 2011 – boosted by a strong financial services sector, strong demand from business travellers for international conferencing, as well as pre-Olympics conference work and April’s Royal Wedding.
However, hotels elsewhere in the country will face a much more challenging year, and early market signs are confirming this, said the asset managers.
As a result, Vision said it believes the hospitality sector outside of London more closely mirrors the broader UK economy, where reduced corporate spending is more noticeable, together with greater uncertainty over the impact of higher VAT.
Performance and forecasts
In London TRevPAR grew by 9 per cent between 2009 and 2010 but only 1.4 per cent in provincial hotels. Closer examination of the figures indicates that rooms-generated income rose by 12.5 per cent over the period and 2.3 per cent elsewhere.
Food and beverage, including conferencing, advanced by 5.7 per cent in London and remained virtually flat (0.1 per cent) in the provinces.
Turning to 2011 Vision's survey indicates that London's hoteliers are targeting food and beverage revenue growth of 10.1 per cent while elsewhere the sector is looking at growth of 9.1 per cent from food and beverage revenue giving a total TRevPAR in the capital of 8.8 per cent and 6.3 per cent in the provinces.
Income generated from rooms is expected to contribute increases of 8.9 per cent for London and 5.9 per cent in the provinces. Year-on-year TRevPAR in 2011 will further be hit by the sharp decrease in cancellation revenues, says Vision.